The world is a quieter place with economic shutdowns all around the world with countries and industry closing their doors until the coronavirus curve can be flattened. This has resulted in a significant decrease in automobile traffic and commercial flights, as well as a reduction in greenhouse gas emissions throughout the world.
Despite the short-term reduction in emissions, global economies will reopen. This has resulted in an increase in global energy consumption.
According to the IEA, global energy consumption climbed at over twice the average pace since 2010, and despite double-digit growth in solar and wind, oil and gas demand continues to rise.
With increased demand comes increased emissions, and in 2018, oil and gas production accounted for the majority of carbon dioxide emissions, totaling 18.6 gigatonnes.
This may not have been an issue in the past because EBITDA performance surpassed emissions and environmental concerns for shareholders, but climate change and sustainability measures have lately been embedded into the new age energy giants.
This might be because climate change has become more visible than ever, making daily headlines.
For months, the West Coast of the United States and Eastern Australia have been subjected to severe and devasting bushfires, resulting in economic, animal, and human losses. Greenland is melting ice seven times faster than it was in the 1990s, implying that an extra 7cm of ocean rise by the end of the century is now possible, putting millions more people in low-lying coastal areas at danger of floods. Water scarcity is a genuine problem in many locations, and by 2025, two-thirds of the world’s population may experience water shortages.
The burden is now on governments, and hence on oil and gas companies, to make a difference. They are attempting to become more sustainable and are aware of the public outcry.
But how can these industry behemoths make a dent in offsetting their emissions?
Equinor, formerly Statoil, was one of the first companies to embrace the green revolution, rebranding in 2018 to become a wider energy firm with a significant renewables portfolio rather than focusing just on oil.
BP vowed in February to become a net-zero corporation, encompassing oil and gas production and all BP operations, by 2050 or sooner. Shell followed suit last month, pledging to become a zero-emissions energy company in the same time span.
ADNOC intends to reduce its greenhouse gas emissions intensity by 25% within the area by 2030. In Saudi Arabia, Aramco’s corporate venture capital arm is planning to create a new $500 million fund to invest in energy efficiency, renewable energy, and innovative oil and gas technology.
Equity investments and venture funds focusing on breakthrough new technologies in renewable energy and energy storage solutions will pave the path for income sources to diversify.
in the future And, while debt-based investments in large-scale renewable energy projects will build a pipeline of strong carbon-offsetting developments, to make an immediate impact on emissions in the short term, oil and gas companies are quickly turning to decentralised off-grid renewable energy solutions to make not only an environmental impact, but also a cost-effective move given the high cost of diesel.
Diesel generating in distant areas like as pipelines, lodging, and on and offshore operations is a substantial expenditure for oil and gas firms who demand energy supply but lack dependable solutions. When transportation, maintenance, and operations costs are included in, the cost per kilowatt hour of diesel-powered energy can exceed $1 in some areas. There are also intangible costs, like as environmental and health risks for individuals who live or work nearby.
Oil and gas businesses are turning these off-grid places green by utilising small-scale wind, solar PV, and energy storage, saving up to 60% and lowering their carbon footprint in the process. When the cost savings are so significant, the decision to adopt off-grid hybrid renewables becomes obvious. Making a green and affordable option.
The strategic and operational investment in renewables suggests a fundamental shift in Big Oil, and how the majors deal with the current energy transition will define their destiny.
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